Biofuel challenges

“The cost disadvantage of producing biofuels is significantly higher than the benefits achieved from their use. This scenario is unlikely to change until 2015, even with the use of second generation biofuels.” – Kaushik Madhavan, research manager, Frost & Sullivan

The quote above from a recent report compiled by global research firm Frost & Sullivan tells you the future of biofuels isn’t all sweetness and light, by any means. That also means increasing the use of biofuels here in America – a key part of President Obama’s energy strategy – is also going to be a lot more challenging than originally thought.

For starters, according to Frost & Sullivan, first generation biofuels are outdated and second generation biofuels are not yet commercially feasible. Improvements in conversion processes of second generation biofuels will be an important factor in regions of world such as Europe, which mandated that 10% of the vehicle fuel it consumes must be some form of biofuel by 2020, noted Kaushik Madhavan, research manager at Frost & Sullivan.

“At the same time, end consumers are apprehensive about the increase in food prices, because of alternate demand for biofuels,” he said in the report. “Worldwide production of biofuels exceeded 12 billion gallons in 2005, which is only a small fraction of the total fuel demand.”

Although the primary aim of promoting biofuels is to reduce dependence on fossil fuels, regional discrepancies in adoption rates and strategies have led to a complex global biofuels scenario, added Madhavan. "On the one hand, countries like Brazil and Sweden are pushing hard for increased bio-content with mandates for both OEMs and oil companies. In other regions, the bio-content mandate is staggered mainly due to feedstock concerns and end consumer fears related to the food vs. fuel debate,” he said.

Here’s the kicker: According to Madhavan’s research, the cost disadvantage of producing biofuels is significantly higher than the benefits achieved from their use. This scenario is unlikely to change until 2015, even with the use of second generation biofuels. "Second generation biofuels will be commercially successful only if the price of extracting biofuels is lower than or equal to the price of producing fossil fuels," he stressed.

"Farming subsidies given by local governments are becoming critical as farmers choose biofuels over food crops," Madhavan pointed out. "Countries with high biofuel consumptions, such as Sweden, are importing feedstock from countries like Brazil thereby increasing food prices. Vast areas of forest land have been erased in Malaysia by farmers wanting to make quick money by exporting feedstock to Europe."

Challenges related to vehicle warranties are also dampening market prospects, as OEMs cannot offer any assurances or guarantees in the event of using high biofuels content, owing to the absence of certification and standardized vehicle testing guidelines, he noted.

“Regional variations and regulations pertaining to the certification of biofuels have resulted in qualitative differences. OEMs are concerned about sourcing feedstock from Southeast Asian countries citing quality issues as global certification of biofuels will be necessary to ensure compatibility across regions,” Madhavan added.

“Diesel exhaust after-treatment, for example, is an important concern in applications with high biofuels content,” he said. “The efficiency of DPFs [diesel particulate filters] is compromised if the biofuel content [of diesel fuel] exceeds 5% to 6%. OEMs using the post-injection based regeneration techniques are not confident of authorizing high bio-content usage in their vehicles."

Not a pretty picture, to be sure, but one that does not paint an end to the possibilities for biofuels playing a significant role in powering vehicles of all shapes and sizes. It just refines the challenges biofuels face and must overcome in order to play a more stable – and thus more environmentally sound – role in meeting ongoing global energy needs.